RNS Number:8361L
Toshiba Corporation
04 June 2003
(This Business Report is an English translation of the original Japanese report.
The translation has not been examined by the Accounting Auditor or the Statutory
Auditors.)
Attachments to the Convocation Notice of
the Ordinary General Meeting of Shareholders
for the 164th Fiscal Period
BUSINESS REPORT
164th Fiscal Period
(April 1, 2002 to March 31, 2003)
REPORT OF OPERATIONS
BALANCE SHEET
STATEMENT OF INCOME AND UNAPPROPRIATED RETAINED EARNINGS
APPROPRIATION PLAN OF UNAPPROPRIATED RETAINED EARNINGS
COPY OF AUDIT REPORT FROM THE ACCOUNTING AUDITOR
COPY OF AUDIT REPORT FROM THE BOARD OF STATUTORY AUDITORS
CONSOLIDATED FINANCIAL STATEMENTS (for reference)
TOSHIBA CORPORATION
Report of Operations
164th Fiscal Period
(April 1, 2002 to March 31, 2003)
1. Business Environment and Results
(1) Operating Performance and Results
Overview
During this period the outlook for the Japanese economy grew increasingly
uncertain. The key factors behind that were sluggish capital investment, flat
private consumption due to the impact of harsh employment and income conditions,
and slowed export growth.
Overseas there was economic expansion in Asia, particularly in China, while in
the United States the pace of economic recovery lost strength and in Europe the
economy gave increasing signs of having stalled.
Against this backdrop, Toshiba Corporation took rapid measures to reinforce
Group operating capabilities. To that end, it threw its company-wide energies
into enhancing competitiveness and improving its cost structure through the
implementation of the "01 Action Plan," an emergency package formulated in
August 2001.
As a result, there was a strong recovery in areas such as the Electronic Devices
and Components segment, particularly semiconductors. This led to a 7% increase
in net sales, to Y3,408.2 billion, and an increase of Y275.1 billion in
recurring profit, to Y43.3 billion. Net income registered an improvement of Y
343.6 billion, to Y83.3 billion, and net income per share was Y25.9,
representing an improvement of Y106.78 from the previous term. Total orders
received by the Company rose 7%, to Y3,312.2 billion, and at the year-end the
outstanding balance of orders stood at Y1,047.1 billion, down 12% from the
previous year-end.
Export sales showed a year-on-year increase of 21%, to Y1,397.2 billion, and
constituted 41% of net sales, an increase of five percentage points over last
year. At the same time, export orders received rose 15%, to Y1,376.4 billion.
In view of the circumstances generally, the Company has decided not to pay an
interim dividend.
Toshiba will continue to implement its radical program of management innovation,
the main pillars of which are the transformation of its management systems,
business structure, and corporate culture.
Under the program, a number of changes in the business structure have been made
since the beginning of the term under review. These include the creation of a
joint-venture company for liquid crystal displays with Matsushita Electric
Industrial Co., Ltd. in April 2002; the integration of the power transmission
and distribution business into a joint-venture company with Mitsubishi Electric
Corp. in October 2002; and the integration of its cathode ray tube business into
a joint-venture company with Matsushita Electric Industrial Co., Ltd. in March
2003. Also, in April 2003 an agreement was reached with Mitsubishi Electric
Corp. to integrate their industrial electric and automation systems businesses
into a joint-venture company. In addition, the Company undertook rational
reductions of procurement costs, downsized its workforce, reduced assets by such
means as the enhancement of realization of current assets and the sale of
holdings of equities and idle real estate, and radically reformed its corporate
culture through its management innovation activities.
During the year, Toshiba also strengthened its global structure for supplying
products. Steps included the establishment of manufacturing companies in China
for such products as notebook PCs and electrical equipment for rolling stock.
* Information and Communications Systems
The e-Solutions Company was impacted by the decline in capital investment
resulting from the economic sluggishness in Japan, which led to declines in
systems integration business in support of IT investment in the government and
corporate sectors, and in automated information equipment for the government
sector. Therefore, there were steep drops in sales of servers and other
hardware, computer network systems such as basic software, and communications
systems.
In consequence, the Information and Communications Systems segment recorded a
10% fall in sales from the previous term, to Y290.8 billion, and total orders
received slid 15%, to Y279.5 billion. The principal orders received in this
segment included broadcasting equipment for Nippon Television Network Corp.'s
new building and the creation of a global code master system (for unified
component management) for Seiko Epson Corporation. The main products sold
included counter terminal machines for the Postal Services Agency and currency
sorters for the United States.
* Social Infrastructure Systems
The Social Infrastructure Systems segment suffered a 6% fall in sales, to Y446.2
billion, owing to factors such as the decline in capital investment. However,
orders received rose by 5%, to Y492.2 billion.
The Social Infrastructure Systems Company generated brisk sales of
transportation systems, centered on railway-related systems. Conversely, sales
of electrical instrumentation systems to the government and corporate sectors
were sluggish, and sales of radar equipment and other radio wave systems fell
substantially. Principal orders received during the term included
station-service equipment for the Bureau of Transportation, Tokyo Metropolitan
Government, and electric locomotives for the Japan Freight Railway Company.
Major sales included electrical equipment for the Taiwan High-Speed Railroad, a
frequency converter for the Central Japan Railway Company's Tsunashima
substation, and electric-power equipment for the Shibuya Data Center of the KDDI
Corporation.
The Medical Systems Company achieved brisk sales of X-ray CT systems and
diagnostic ultrasound systems, and sales of diagnostic X-ray systems were firm.
Principal items included X-ray CT systems and diagnostic ultrasound systems for
the Tokyo Women's Medical University Hospital, and diagnostic ultrasound systems
for the Tohoku University School of Medicine Hospital.
* Power Systems
Orders received by the Power Systems & Services Company fell substantially,
owing primarily to the transfer of control of the power transmission and
distribution business, and a decline in orders for large-scale plants. Factors
such as the transfer of the aforementioned operations caused sales to drop
sharply, in spite of the fact that export sales rose thanks to the posting of
sales to Taiwan and other countries. As a result, orders received in this
segment fell 22% year-on-year, to Y311.9 billion, and sales were down by 14%, to
Y442.8 billion. Principal orders included steam-turbine power generating
equipment for Italy, and the modification of power generating equipment in
Kuwait, and principal sales included thermal power generating equipment for
Taiwan (sales divided over several years), and power generating equipment for
the Chubu Electric Power Company, Inc.'s Hamaoka Nuclear Power Station Unit No.
5 (sales divided over several years).
* Digital Media
In the Digital Media segment, sales of personal computers were strong amid the
slowing in the market's expansion. Sales totaled Y1,162.5 billion, up 22%
year-on-year, while orders received also jumped 22%, to reach Y1,162.7 billion.
At the iValue Creation Company, Internet-related businesses continued to perform
well. Highlights were the "Ekimae Tanken Kurabu," a scheme providing information
and services relating to travel excursions and other entertainments via personal
computers and mobile telephones, and a service enabling companies to utilize
software on Toshiba servers via the Internet.
At the Digital Media Network Company, sales of DVD video players, personal
computers, and magnetic disk drives were brisk, but sales of color televisions
dropped off slightly, and those of optical disk drives were weak.
The Mobile Communications Company suffered a sharp decline in export sales of
mobile communications equipment, particularly mobile telephones. Domestically,
however, there were brisk sales of mobile camera-telephones with movie mail
capability, with the result that overall performance was favorable.
* Home Appliances
At the Home Appliances Company, sales of washing machines and refrigerators were
sluggish as a result of price reductions, causing overall sales in the Home
Appliances segment to slip 5%, to Y122.4 billion. However, two products that
were well received by consumers were the "Kaisoku Ginga 21" series of fully
automated washing/drying machines that offer much-improved drying capabilities,
and the "Senzoko" series of refrigerator-freezers that use no CFC substitutes
and make the top shelf easier to use.
* Electronic Devices and Components
In the Electronic Devices and Components segment, growth in demand for devices
for use in digital and other equipment buoyed sales of semiconductors. In
consequence, sales rose 18%, to Y943.2 billion.
The Semiconductor Company achieved robust sales of memories and system LSIs,
particularly owing to a rapid surge in demand during the second half for NAND
flash-memories for use in mobile phones. Sales of discrete ICs were also brisk.
Toshiba withdrew from the commodity DRAM business in April 2002.
The Display Devices & Components Company achieved firm overall sales.
* Research and Development
In order to strengthen company-wide software-development capabilities, in
February 2003 the Software Technology Center was established as a corporate
support service division.
The following are the principal results of research and development activities
during the term under review.
* Development of technology to accelerate Website access
Toshiba has developed technology that employs a unique method of compressing the
content of Websites on the Internet, thereby increasing response speed and
cutting communication costs by reducing the volume of data flow in networks.
Without the need to change existing Web systems, the technology reduces the
volume of communication data to only one-tenth of its former size, and cuts
response time to around one-third.
Trials manufacturing of a home robot able to converse with humans using
voice-recognition technology
Toshiba has experimentally manufactureda home robot with voice-recognition
technology that allows it to converse with humans, and with image-recognition
technology that allows it to recognize people whose features are already
recorded in its memory. The Company aims to commercialize it as a "robotic
information home appliance" able to give operating instructions to equipment
connected to the home network.
* Development of 2-gigabit NAND flash memory - the largest capacity in the
industry
Working jointly with an American company, SanDisk Corp., Toshiba has developed a
NAND flash memory with significant capacity - 2 gigabits, the largest in the
industry - using 130-nanometer ("nano" means one billionth) ultra-fine
processing technology. Future demand is projected for use in memory cards for
equipment such as digital cameras and mobile information terminals.
* Development of automatic connection technology using BluetoothTM
Toshiba has developed automatic connection technology for equipment
incorporating BluetoothTM, the global standard for the wireless connection of
digital equipment. It makes it possible to continue to send and receive data by
simply placing two pieces of equipment at a distance of approximately 10 cm
apart for about one second. Projected applications include the settlement of
payments and exchange of data between mobile phones and point-of-sale (POS)
terminals, exchanges of data, and ticket verification between mobile phones and
terminal equipment at the entrances to stadiums, theater and similar
establishments.
* Plant and Equipment Investment
During the term under review, Toshiba conducted selective plant and equipment
investment totaling Y88.7 billion in terms of the value of orders placed. This
was directed primarily at two growth areas: the Electronic Devices and
Components segment and the Digital Media segment.
The principal items of plant and equipment completed during the term under
review included state-of-the-art manufacturing facilities for system LSIs at the
Oita Operations, and state-of-the-art development facilities for super LSIs at
the Yokohama Complex.
Capital investment under way during the term included investment in
miniaturization facilities for NAND flash memories at the Yokkaichi Operations,
and equipment for increasing production of analog ICs at the Kitakyushu
Operations.
* Fund-raising
The funds required for plant and equipment investment and other purposes were
derived primarily from internal capital and borrowing.
The Company issued straight corporate bonds worth Y130 billion during the term.
(2) Issues to Be Addressed
It is feared that the economic sluggishness in Japan will continue, and the
difficult operating environment is expected to persist as a result.
In view of these circumstances, in March 2003 Toshiba formulated a medium-term
business plan to cover the three-year period from fiscal 2003 to fiscal 2005.
Its aim is to transform Toshiba Group into a highly profitable group of
companies, active in both high growth and stable growth businesses.
The plan classifies three core Toshiba Group businesses: digital products
business, electronic devices business, and social infrastructure business. The
digital products and electronic devices businesses are seen as high-growth
business domains in which Toshiba aims to establish itself as one of the
foremost groups in each product area. The social infrastructure business is seen
as a stable business domain in which Toshiba seeks to establish a stable
earnings base by expanding operations overseas, cultivating new lines of
business, and undertaking reorganization in conjunction with affiliated
companies in order to enhance operating strengths.
In order to put in place the structure needed to carry out this medium-term
business plan, in April 2003 Toshiba reorganized its in-house company structure
and created the following 10 organizations.
- Mobile Communications Company
- Digital Media Network Company
- Semiconductor Company
- Display Devices & Components Control Center
- Industrial and Power Systems & Services Company
- Social Network & Infrastructure Systems Company
- Home Appliances Company
- e-Solutions Company
- Medical Systems Company
- Network Services & Contents Control Center
In parallel with this, business groups were formed by bringing together in-house
companies and affiliates in areas with similar characteristics, such as pace of
business and growth potential. A business group chief executive officer has been
appointed in each business group to assist the President and CEO in overseeing
it , with the objective of enhancing group consolidated management by such means
as expediting the speed of management and assuring flexible allocation of
resources.
Other objectives of the plan are to enhance financial soundness, implement
capital investment in which priority is given to growth fields, commercialize
the results of development, and nurture the seeds of new technologies for the
future.
Another objective is to further enhance corporate governance through the
reinforcement of supervisory functions and improvement of management
transparency, and to increase operating agility and flexibility. To that end,
the Company has decided to submit a proposal to the ordinary general meeting of
shareholders, scheduled for June 2003, requesting that the articles of
incorporation be amended to permit the adoption of the "committee system."
In addition, the Display Devices & Components Control Center, the Home
Appliances Company, the e-Solutions Company, and the Medical Systems Company are
to be spun off in October 2003 in a move aimed at switching to an optimum
management structure and enhancing business strength. This will be effected by
such means as pursuing rationalization and efficiency through integration with
affiliates, expediting alliances with other companies, and enabling them to
adopt the management style best suited to their particular field of activity.
Toshiba is committed to countering its harsh operating environment by devoting
its full energies to securing and increasing earnings and to attaining a high
rate of growth. At the same time, the Company is dedicated to compliance with
laws and appropriate risk management and will endeavor to increase the
transparency of its management still further. For these endeavors, we ask all of
our shareholders for their continued support.
2. Business Results and Asset Conditions for Four-year Period
161st period Fiscal 162nd period Fiscal 163rd period Fiscal 164th period Fiscal
Year 1999 Year 2000 Year 2001 Year 2002
Item (Subject period)
Orders received 3,595.1 3,531.3 3,082.3 3,312.2
(Billions of yen)
Sales 3,505.3 3,678.9 3,196.8 3,408.2
(Billions of yen)
Net income (loss) (244.5) 26.4 (260.3) 83.3
(Billions of yen)
Net income (loss) (75.96) 8.20 (80.88) 25.90
per share (yen)
Total assets 3,380.2 3,317.5 3,139.1 2,877.8
(Billions of yen)
(Notes)
1. TheY 244.5 billion net loss of the 161st period mainly derived from
extraordinary losses includingY312.1 billion losses from the transfer of prior
allowance for employees' retirement and Y106.3 billion FDC litigation settlement
cost.
2. TheY 260.3 billion net loss of the 163rd period mainly derived from Y
196.7 billion operating loss which was the result of sever market condition of
semiconductors and other electronic devices, and Y188.7 billion extraordinary
losses including expenses related to improvements in business structure.
3. Relationship with Other Companies
(1) Outline of main subsidiaries
Name of company Stated capital Voting rights held by Main business
Toshiba (percentage)
Toshiba TEC Corporation 39,970 51.5 Manufacture and sales of
(Millions of yen) distribution information
systems, image information and
communication systems, consumer
products and others
Toshiba Plant Kensetsu Co., 11,876 56.0 Design, construction
Ltd. (Millions of yen) and maintenance of
electric facilities,
nuclear power plants and
industrial facilities
Toshiba Elevator and 21,407 80.0 Development, design,
Building Systems (Millions of yen) manufacture, sales,
Corporation installation, maintenance and
repair of elevators and
escalators, and integrated
monitoring and control of
building-related facilities
Toshiba Carrier Corporation 11,510 60.0 Manufacture and sales of room
(Millions of yen) air-conditioners, air-
conditioners for business use,
air-conditioning systems for
railway carriages, freezer
showcases, ventilating fans, air
cleaners, compressors and others
Toshiba Lighting & 10,000 100.0 Manufacture and sales of lamps,
Technology Corporation (Millions of yen) lighting fixtures, wiring
devices, electricity
distribution and control
devices, telecommunication and
sound devices, and other related
and applied products
Toshiba Finance 3,910 100.0 Installment sales,
Corporation (Millions of yen) and
lease of electric
equipment and others
Toshiba America, 840,050 100.0 Holding company of
Inc. (Thousands of operating companies
U.S. dollars) in the U. S.
Toshiba Capital (Asia) Ltd. 4,000 100.0 Loan and other financial support
(Thousands of activities for subsidiaries in
Singapore dollars) Asia and Oceania
In July 2002, as a result of its dissolution, Semiconductor America, Inc. ceased
to be classified as a main subsidiary.
In August 2002, as a result of the exchange of shares with Kyocera, Corporation,
Toshiba Chemical Corporation ceased to be classified as a main subsidiary. At
the same time, it changed its trade name into Kyocera Chemical Corporation.
(2) Others
Toshiba has 315 consolidated subsidiaries (including the above 8 companies), and
52 unconsolidated subsidiaries and affiliated companies accounted for by the
equity method. In conformity with accounting principles generally accepted in
the U.S., consolidated net sales in this period amounted to Y5,655,778 million,
5% increase from the previous period. Consolidated net profit in this period
was Y18,503 million.
Main parties in technology collaboration relationship are Texas Instruments,
Inc., QUALCOMM, Inc. and Motorola, Inc., all of which are U.S. corporations.
4. Condition of Shares As of March 31, 2003
Total number of authorized shares: 10,000,000,000
Total number of issued shares 3,219,027,165
Total number of shareholders: 486,702
Principal shareholders:
Name of Shareholder Number of Shares Voting rights Shareholders' Shares
held (in held
thousands) Held by Toshiba
(Percentage) Number Voting rights
held
(in thousands) (Percentage)
The Master Trust Bank of Japan, Ltd.(trust 171,316 5.3 0 -
accounts)
The Dai-ichi Mutual Life 116,937 3.6 0 -
Insurance Company
Japan Trustee Services Bank, Ltd.(trust 116,436 3.6 0 -
accounts)
Nippon Life Insurance Company 104,501 3.2 0 -
Sumitomo Mitsui Banking Corporation 76,003 2.3 0 -
State Street Bank and Trust Company 58,165 1.8 0 -
Toshiba Employees Stocks 53,285 1.6 0 -
Ownership Plan
The Chase Manhattan Bank, 51,728 1.6 0 -
N.A. London
NIPPONKOA Insurance Co., Ltd 50,000 1.5 4,635 0.5
Shinsei Bank, Limited 48,961 1.5 0 -
Voting rights held by the following category of shareholders:
Category Government and Financial Securities Other entities Overseas Individuals and
local public institutions companies entities and others
entities others
(individuals
included)
Percentage 0.0 41.6 0.9 3.5 16.2 37.8
(0.0)
Acquisition, disposition & others and holding of Treasury stock
Shares acquired:Shares less than one unit (Tangen-miman-kabushiki) purchased
common stock 2,058,864
Aggregate amount of acquisition cost (Thousands of yen): 789,425
Shares disposed: common stock 2,072,276
Aggregate amount of sales value (Thousands of yen): 817,522
Shares held as of the closing date of this period: common stock 211,876
5. Main Bank Loans
As of March 31, 2003
Loans outstanding Toshiba shares
Lender (Billions of yen) held by lenders
(Thousands of shares)
Toshiba America Capital Corporation 47.8 0
Kawasaki Estate Management Co., Ltd. 38.9 0
Sumitomo Mitsui Banking Corporation 31.1 76,003
Mizuho Corporate Bank, Ltd. 28.4 41,443
The Dai-ichi Mutual Life Insurance 25.0 116,937
Company
6. Management
As of March 31, 2002
(The person marked with * is the Executive Officer assigned for office and
duties described in square brackets.)
Taizo Nishimuro Chairman of the Board and Director
Tadashi Okamura* President and Chief Executive Officer and Director
Kiyoaki Shimagami* Director
(Corporate Senior Executive Vice President, President
Support, Responsible for compliance and finance &
accounting)
Yasuo Morimoto* Director
(Corporate Senior Executive Vice President, President
Support, Responsible for strategic planning,
consolidated
management, export control and information system)
Tetsuya Mizoguchi* Director
(Corporate Executive Vice President, Responsible for
technology, President and CEO of Mobile Communications
Company of Toshiba)
Takeshi Iida* Director
(Corporate Executive Vice President, Responsible for
human resources and administration, and General
Maneger of Human Resources and Administration
Division)
Makoto Nakagawa* Director
(Corporate Executive Vice President, Responsible for
sales, Deputy General Manager of Management Innovation
Division, General Manager of Corporate Marketing
Planning Group)
Tadashi Matsumoto* Director
(Corporate Senior Vice President, Responsible for
manufacturing, environment and procurement, General
Manager of Management Innovation Division, General
Manager of Procurement Innovation Division, President
and CEO of Display Devices & Components Company of
Toshiba)
Kosaku Inaba Director
(Director and Senior Counselor of Ishikawajima-Harima
Heavy Industry Co., Ltd.)
Sakutaro Tanino Director
(Visiting Professor of Graduate School of Asia-Pacific
Studies, Waseda University)
Yasuhiko Torii Director
(President of The Promotion and Mutual Aid Corporation
for Private Schools of Japan)
Akinobu Kasami Statutory Auditor (full-time)
Susumu Terao Statutory Auditor (full-time)
Shunsaku Hashimoto Statutory Auditor
(Advisor at Sumitomo Mitsui Banking Corporation)
Eiichi Kakei Statutory Auditor (attorney-at-law)
(Notes)
1. At the conclusion of the Ordinary General Meeting of Shareholders for
the 163rd fiscal period held on June 26, 2002, three (3) Directors, Messrs.
Tomohiko Sasaki, Hiroo Okuhara and Kozo Wada retired as their terms of office
expired.
2. At the conclusion of the Ordinary General Meeting of Shareholders for
the 163rd fiscal period, Mr. Kenjiro Hayashi, Statutory Auditor, resigned from
office.
3. At the Ordinary General Meeting of Shareholders for the 163rd fiscal
period, Mr. Makoto Nakagawa, Director, was elected and assumed office.
4. The following four (4) persons are Representative Directors.
Taizo Nishimuro Chairman of the Board and
Director
Tadashi Okamura President and Chief Executive
Officer and Director
Kiyoaki Shimagami Director
Yasuo Morimoto Director
5. Messrs. Kosaku Inaba, Sakutaro Tanino and Yasuhiko Torii are Outside
Directors prescribed by Article 188, paragraph 2 item 7-2 of the Commercial
Code.
6. Mr. Shunsaku Hashimoto and Mr. Eiichi Kakei are Outside Statutory
Auditors prescribed by Article 18, paragraph 1 of the Law for Special Exceptions
to the Commercial Code concerning Audit, etc., of Kabushiki-Kaisha.
7. On April 1, 2003, the following changes were made:
Yasuo Morimoto* Director
(Corporate Senior Executive Vice President, President Support, Responsible for
strategic planning, consolidated management, export control and Chief Operating
Officer of Network Services & Content Control Center)
Tetsuya Mizoguchi* Director
(Corporate Executive Vice President, Responsible for technology)
Takeshi Iida* Director
(Corporate Executive Vice President, Responsible for Infrastructure System Group
and, human resources and administration)
Makoto Nakagawa* Director
(Corporate Executive Vice President, Responsible for Consumer Electronics Group
and sales, Deputy General Manager of Management Innovation Division, General
Manager of Corporate Marketing Planning Group, Chief Executive of Consumer
Electronics Marketing Control Center)
Tadashi Matsumoto* Director
(Corporate Senior Vice President, Responsible for manufacturing, environment and
procurement, General Manager of Management Innovation Division, General Manager
of Procurement Innovation Division)
Amount of the compensation etc.
Item Number of Directors or Amount
Statutory Auditors (Millions of Yen)
Directors Fixed compensation 14 359
Bonus 0 0
Retirement allowances 3 139
Statutory Fixed compensation 5 63
Auditors Retirement allowances 1 21
7. Employees
As of March 31, 2003
Item Male Female Total
Number of employees 35,713 4,162 39,875
(Change from the close of the (5,123 decrease) (651 decrease) (5,774 decrease)
preceding period)
Average age 39.5 37.0 39.2
Average duration of 17.1 15.8 17.0
employment (Year)
8. Main Business
Information & Communication Systems
government systems, manufacturing systems, distributing & banking systems,
broadcasting systems, OA computers, FA/EA computers, workstations, optical fiber
transmission systems, satellite communications systems, ITV systems, business
telephones, automatic letter sorting machines, banking machines, and others
Social Infrastructure Systems
government systems, microwave communications systems, radar systems, telemeters,
automatic railroad station equipment, electric apparatus control systems,
industrial inverters, motor drives, watt-hour meters, automatic metering
systems, instruments control systems, industrial measuring instruments, electric
locomotives, electric equipment for rolling stock, operational administration
systems, diagnostic X-ray systems, CT systems, MRI systems, diagnostic
ultrasound systems, diagnostic nuclear medicine systems, clinical analysis
systems, and others
Power Systems
nuclear power equipment, nuclear fusion equipment, water wheels, pump turbines,
power transformers, frequency converters, gas insulated switchgears, circuit
breakers, switchgears, lightning arresters, rectifiers, metal-clad switchboards,
industrial control equipment, steam turbines, gas turbines, generators,
super-conductivity applying equipment, and others
Digital Media
personal computers, PC servers, hard disk drives, DVD-ROM combination drives,
DVD-ROM drives, TV-sets, BS/CS equipment, projection TVs, camera systems, DVD
video players, digital still camera, PDA (personal digital assistance),
cellular portable telephones, and others
Home Appliances
refrigerators, washing machines, clothes dryers, vacuum cleaners, personal care
products, microwave ovens, food processors, and others
Electronic Devices & Components
transistors, diodes, OPTO semiconductor devices, rectifiers, CCD and CMOS image
sensors, bipolar ICs, general-purpose logic ICs, application specific logic ICs,
microcomputers, ASICs, memory ICs, liquid crystal displays, cathode ray tubes,
transmitting tubes, microwave tubes, X-ray tubes, magnetrons, X-ray image
intensifier tubes, special metal materials, fine ceramics, amorphous metal
materials, rechargeable lithium-ion batteries, and others
9. Main Places of Business and Facilities
As of March 31, 2003
Places of business:
Tokyo Principal Office (Minato-ku, Tokyo), Hokkaido Branch Office (Sapporo
City), Tohoku Branch Office (Sendai City), Kita-Kanto Branch Office (Saitama
City), Higashi-Kanto Branch Office (Chiba City), Kanagawa Branch Office
(Yokohama City), Hokuriku Branch Office (Toyama City), Chubu Branch Office
(Nagoya City), Kansai Branch Office (Osaka City), Chugoku Branch Office
(Hiroshima City), Shikoku Branch Office (Takamatsu City), Kyushu Branch Office
(Fukuoka City)
Production Facilities:
Nasu Operations (Otawara City), Fukaya Operations (Fukaya City), Ome Complex
(Ome City), Hino Operations (Hino City), Fuchu Complex (Fuchu City, Tokyo),
Komukai Operations (Kawasaki City), Microelectronics Center (Kawasaki City),
Yanagicho Compex (Kawasaki City), Keihin Product Operations (Yokohama City),
Yokohama Complex (Yokohama City), Aichi Operations (Seto City), Mie Operations
(Asahi-cho, Mie Prefecture), Yokkaichi Operations (Yokkaichi City), Osaka
Operations (Ibaraki City), Himeji Operations (Himeji City), Kitakyushu
Operations (Kitakyushu City), Oita Operations (Oita City)
Laboratories:
Corporate Research & Development Center (Kawasaki City), Software Engineering
Center (Kawasaki City), Corporate Manufacturing Engineering Center (Yokohama
City), and other 7 research & development centers
(Note) As of April 1, 2003, Kita-Kanto Branch Office, Higashi-Kanto Branch
Office and Kanagawa Branch Office were consolidated into Shutoken Branch Office
and Shutoken-Minami Branch Office.
(The following financial statements are for Toshiba Corporation only.
Therefore, sales amount, net income and all other figures are on an
unconsolidated basis.)
BALANCE SHEET
As of March 31, 2003
Assets Liabilities
(Millions of yen) (Millions of yen)
Current assets 1,232,957 Current liabilities 1,384,089
Cash and cash equivalents 119,912 Notes payable 6,699
Notes receivable 15,805 Accounts payable 651,449
Accounts receivable 555,231 Short-term bank loans 239,551
Finished products 124,997 Commercial Papers 35,000
Semi-finished products &
work in process 123,507 Current portion of debentures 101,771
Raw materials 34,453 Accrued liabilities 158,941
Advance payments 47,941 Corporate & other
taxes payable 160
Prepaid expenses 7,249 Advance payments received 176,149
Deferred income tax assets 88,728 Deposits received 2,778
Other current assets 127,503 Allowance for warranty & others 1,166
Allowance for doubtful accounts -12,373 Other current liabilities 10,421
Fixed assets 1,644,848 Long-term liabilities 785,133
Tangible fixed assets 479,203 Debentures 402,424
Buildings 171,576 Long-term bank loans 80,402
Structures 17,684 Allowance for retirement benefits 302,084
Machinery & equipment 147,749 Allowance for loss from
repurchase of computers 144
Delivery equipment 159 Other long-term liabilities 78
Tools, fixtures & furniture 69,972
Land 54,283
Construction in progress 17,777
Total liabilities 2,169,222
Intangible fixed assets 42,713
Software 33,658
Other intangible fixed assets 9,055 Shareholders' equity
Capital stock 274,926
Investments & others 1,122,931 Capital surplus 262,650
Investment Securities 279,271 Capital surplus 262,650
Security investments in Retained earnings 152,608
subsidiaries 407,116
Other investments in Deferral of gains on
subsidiaries 53,732 sales of property 13,256
Long-term loans 58,758 Reserve for special depreciation 249
Long-term prepaid expenses 4,985 Reserves of program 178
Deferred income tax assets 244,410
Other investments 75,868
Allowance for doubtful accounts -1,211 Unappropriated retained
earnings for the period 138,923
(included net income for the period) (83,364)
Unrealized gains of stock & others
on revaluation, net of tax effect 18,481
Treasury stock -83
Total shareholders' equity 708,583
Total assets 2,877,805 Total liabilities & shareholders'
equity 2,877,805
(Notes)
1. Current monetary assets to subsidiaries (Millions of yen) 251,740
Long-term monetary assets to subsidiaries (Millions of yen) 72,599
Current monetary liabilities to subsidiaries (Millions of yen) 438,426
2. Accumulated depreciation for tangible fixed assets
(Millions of yen) 1,571,704
3. Principal security investments in subsidiaries
in foreign currency (Thousands of U.S. dollars) 888,584
Principal accounts payable in foreign currency
(Thousands of U.S. dollars) 960,873
4. Liabilities on guarantees and their kinds (Millions of yen) 420,112
5. Assets pledged as collateral
Land (Millions of yen) -
Buildings (Millions of yen) 12
6. Net income per share for the period (yen) 25.90
7. Assets as set forth in Article 290-1-6 of the
Commercial Code (Millions of yen) 18,481
8. Method of valuation of securities
Marketable securities are valued at market value by the moving average
method.
9. Method of valuation of inventories
Finished and semi-finished products are valued at original cost based on the
specific identification method, or at lower-of-cost-or-market method based on
the moving average method. Work-in-process is valued at original cost based on
the specific identification method, or at lower-of-cost-or-market method based
on the weighted average method. Raw materials are valued at original cost or
lower-of-cost-or-market method based on the moving average method.
10. Method of depreciation for tangible fixed assets is the declining balance
method. However, for buildings acquired on or after April 1, 1998 (excluding
appurtenant equipment), the straight-line method is applied.
11. Allowance for retirement benefits is based on the estimated amount of the
liabilities of retirement benefits and the assets of the employees' pension fund
at the end of fiscal year 2002.
In conjunction with the implementation of the Defined Benefit
Enterprise Pension Plan Law, Toshiba received approval from the Minister of
Health, Labor and Welfare on September 18, 2002 to transfer the government
entrusted portion of the future retirement benefit obligations of the employee
pension fund. The entrusted portion of the liabilities of retirement benefits
and the related plan assets are removed from the Company's accounting record for
financial statement purposes as of the date of such approval. The amount
returned isY 339,034 million as of March 31,2003.
12. Consumption tax is accounted for by the net accounting method.
STATEMENT OF INCOME AND UNAPPROPRIATED RETAINED EARNINGS
April 1, 2002 to March 31, 2003
(Millions of yen)
Ordinary income & loss
Operating income & expenses
Net Sales 3,408,251
Cost of sales 2,763,145
Selling, general & administrative expenses 609,916
Net operating income 35,188
Non-operating income & expenses
Non-operating income 78,512
Interest income 610
Dividend income 46,318
Miscellaneous income 31,583
Non-operating expenses 70,322
Interest expenses 12,787
Miscellaneous losses 57,535
Recurring profit 43,378
Extraordinary gains & losses
Extraordinary gains 133,672
Gains from the transfer to the Japanese government of the
substantial portion of the Employee Pension Fund Liabilities
portion of the emplpoyees' pension fund 108,787
Gains from the transfer of cathode ray tubes business 10,438
Gains from sales of fixed assets 8,044
Gains from sales of securities 6,403
Extraordinary losses 43,379
Losses from impairment of securities 22,846
Losses from restructuring business 13,678
Losses from compensation for thermal power equipment 6,854
Income before taxes 133,671
Corporate tax, inhabitant tax and business tax 151
Income taxes deferred 50,155
Net income 83,364
Losses brought from the previous period -13,155
Transfer from earned surplus reserve 68,730
Losses from the disposal of treasury stock 15
Unappropriated retained earnings for the period 138,923
(Notes)
1. The percentage-of-completion method is applied for long term
construction work contracts (2 years or longer and Y5 billion or more).
2. The Y8,044 million gains from sales of fixed assets were mainly brought
by Y5,092 million gains of sales of land.
3. The Y6,403 million gains from sales of securities consist of Y3,453
million gains from sales of subsidiary securities and Y2,949 million gains from
sales of investment securities.
4. The Y22,846 million losses from impairment of securities consist of Y
11,541 million impairment of subsidiary securities and Y11,305 million
impairment of invested securities. The losses from impairment of subsidiary
securities were mainly brought by Y6,999 million impairment of the stock of A &
T Battery Corporation.
5. The Y13,678 million losses from restructuring business consist of Y8,344
million losses from restructuring cathode ray tube business and Y5,333 million
losses from restructuring electronic motor bussiness.
6. Sales to subsidiaries (millions of yen) 1,859,251
7. Purchases from subsidiaries (millions of yen) 1,596,436
8. Non-operating transactions with
subsidiaries (millions of yen) 74,226
APPROPRIATION PLAN OF UNAPPROPRIATED RETAINED EARNINGS
(Yen)
Unappropriated retained earnings for the period 138,923,831,835
Transfer from deferral of gains on sales of property 59,520,490
Transfer from special depreciation reserve 62,409,389
Transfer from reserves of program 60,060,939
Total 139,105,822,653
Disposition is made as follows:
Dividend (3 yen per share) 9,656,445,867
Balance carried forward 129,449,376,786
(Notes) Transfer from deferral of gains on sales of property, special
depreciation reserve and reserves of program are based on the Special Taxation
Measures Law.
Report of Independent Auditors
The Board of Directors
Toshiba Corporation
April 22, 2003
Shin Nihon & Co.
Masaaki Isobe
Representative and Engagement Partner
Certified Public Accountant
Fumio Takahashi
Representative and Engagement Partner
Certified Public Accountant
Kazuo Ogawa
Representative and Engagement Partner
Certified Public Accountant
In accordance with Article 2 of "The Law for Special Exceptions to the
Commercial Code Concerning Audits, etc. of Joint Stock Corporations," we have
audited the balance sheet, the statement of income, the accounting matters
stated in the business report, the proposal for appropriation of retained
earnings and the accounting matters stated in the supplementary financial
schedules of Toshiba Corporation applicable to the 164th fiscal year from April
1, 2002 to March 31, 2003. The accounting matters which we have audited in the
business report and the supplementary financial schedules were derived from the
accounting books and records of the Company. These financial statements and the
supplementary financial schedules are the responsibility of the Company'
management. Our responsibility is to independently express an opinion on these
financial statements and the supplementary financial schedules based on our
audit.
We conducted our audit in accordance with auditing standards, procedures and
practices generally accepted and applied in Japan. Those standards, procedures
and practices require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the supplementary financial
schedules are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and the supplementary financial schedules. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements and the supplementary financial schedules. We believe that our audit
provides a reasonable basis for our opinion. Our audit included procedures
applied to the accounts of the Company's subsidiaries as considered necessary.
As a result of our audit, it is our opinion that:
(1) the balance sheet and the statement of income present properly the
Company's financial position and the results of its operations in accordance
with the related regulations and the Articles of Incorporation,
(2) the accounting matters stated in the business report present properly the
Company's affairs in accordance with the related regulations and the Articles of
Incorporation,
(3) the proposal for appropriation of retained earnings is presented in
accordance with the related regulations and the Articles of Incorporation, and
(4) there is nothing to point out as to the accounting matters stated in the
supplementary financial schedules in accordance with the provisions of the
Commercial Code.
We have no interest in the Company which should be disclosed in compliance with
the Certified Public Accountants Law.
COPY OF AUDIT REPORT FROM THE BOARD OF STATUTORY AUDITORS
April 24, 2003
We, the Board of Statutory Auditors of Toshiba Corporation (hereinafter the
"Company"), received each Statutory Auditor's report on the audit method and
results of audit in the examination of the execution of office by the Directors
during the 164th fiscal period, from April 1, 2002, to March 31, 2003. Upon
deliberation, we present this Audit Report and report as follows.
1. Outline of audit method by Statutory Auditors
Each Statutory Auditor observed the audit policy, work assignment and other
rules on which the Board of Statutory Auditors decided, and conducted the
following activities:
(1) Attended the meetings of the Board of Directors and other important
meetings;
(2) Received reports on the business activities of the Company from
Directors and employees;
(3) Inspected important documents for approval and others;
(4) Investigated the status of the business affairs and asset conditions
of the head office and other main places of business;
(5) Requested the Company's subsidiaries to provide reports of their
operations as necessary occasions arose;
(6) Received reports and explanations of the Accounting Auditor at any
time; and
(7) Examined accounting documents and their accompanying statement of
details.
In addition to the audit mentioned above, as the need arose, the Statutory
Auditors requested the Directors and others to provide reports and investigated
their conducts intensively to assure that there should be neither any Director's
engagement in any competitive business with the Company, transactions bearing a
conflict of interest between any Director and the Company, conduct of the
Company in connection with extending free benefits or favors, extraordinary
transactions between the Company and subsidiaries or shareholders, nor
acquisition and deposition of the Company's own shares.
2. Results of audit
(1) The method and results of the audit by Shin Nihon & Co., Accounting
Auditor, is appropriate.
(2) The report of operations presents fairly the status of the Company in
accordance with the laws of Japan and the Articles of Incorporation.
(3) The appropriation plan of unappropriated retained earnings does not
contain any matters to be pointed out in the light of the status of assets of
the Company and other conditions.
(4) The statement of details accompanying the accounting documents
presents fairly the matters which are required to be mentioned therein, and it
does not contain any matters to be pointed out.
(5) With respect to the Directors' execution of office of the Company and
its subsidiaries, we have observed no unfair conduct or any material breach of
the laws of Japan or the Articles of Incorporation.
In addition, we have observed no breach of duty by the Directors concerning the
conduct of any Director engaging in any competitive business with the Company,
transactions bearing a conflict of interest between any Director and the
Company, the conduct of the Company extending free benefits or favors,
extraordinary transactions between the Company and its subsidiaries or
shareholders, and the acquisition and deposition of the Company's own shares.
Akinobu Kasami
Statutory Auditor (full-time)
Susumu Terao
Statutory Auditor (full-time)
Shunsaku Hashimoto
Statutory Auditor
Eiichi Kakei
Statutory Auditor
The Board of Statutory Auditors
Toshiba Corporation
Note: Mr. Shunsaku Hashimoto and Mr. Eiichi Kakei are Outside Statutory
Auditors prescribed by Article 18, paragraph 1 of the Law for Special Exceptions
to the Commercial Code concerning Audit, etc., of Kabushiki-Kaisha.
CONSOLIDATED FINANCIAL STATEMENTS (for reference)
1. Outline
Item 163rd period 164th period
Fiscal Year 2001 Fiscal Year 2002
(Subject period)
Net sales 5,394.0 5,655.8
(billions of yen)
Operating income (loss) -113.6 115.5
(billions of yen)
Income (loss) before income taxes -376.7 53.1
and minority interest
(billions of yen)
Net income (loss) -254.0 18.5
(billions of yen)
Total assets 5,407.8 5,238.9
(billions of yen)
Free cash flows -176.4 123.6
(billions of yen)
2. Segment Information April 1, 2002 to March 31, 2003
Segment Net sales Net sales Operating income (loss)
(billions of yen) (percentage) (billions of yen)
Information & 908.7 14 10.4
Communications Systems
Social Infrastructure 922.8 15 20.7
Systems
Power Systems 523.7 8 21.6
Digital Media 1,658.1 26 9.3
Home Appliances 660.7 10 3.5
Electronic Devices & 1,296.0 20 30.5
Components
Others 431.4 7 18.6
Total 6,401.4 100 114.6
Eliminations -745.6 0.9
Consolidated 5,655.8 115.5
3. Consolidated Financial Statements (Summary)
The following summary of consolidated financial statements is based on
generally accepted accounting principles in the U.S.
CONSOLIDATED BALANCE SHEET
As of March 31, 2003
Assets Liabilities and shareholders' equity
(Millions of yen) (Millions of yen)
Current assets 2,621,216 Current liabilities 2,618,777
Cash and cash equivalents 327,098 Short-term borrowings and current 771,342
portion
of long-term debt
Notes and accounts receivable, trade 1,089,540 Notes and accounts payable, trade 981,970
Finance receivables, net 166,190 Other current liabilities 865,465
Inventories 629,659
Prepaid expenses and other current 408,729 Long-term liabilities 1,873,150
assets
Long-term receivables 27,153 Minority interest in consolidated 175,945
subsidiaries
Long-term finance receivables, net 260,361 Shareholders' equity 571,064
Common stock 274,926
Investments 396,059 Additional paid-in capital 285,736
Retained earnings 462,058
Property, plant and equipment 1,199,285 Accumulated other comprehensive -450,775
income
(loss)
Other assets 734,862 Treasury stock -881
Total assets 5,238,936 Total liabilities and shareholders' 5,238,936
equity
CONSOLIDATED STATEMENT OF INCOME
April 1, 2002 to March 31, 2003
(Millions of yen)
Net sales 5,655,778
Cost of sales 4,146,460
Selling, general and administrative expenses 1,393,776
Operating income 115,542
Non-operating income 79,318
Non-operating expenses 141,737
Income before income taxes and minority interest 53,123
Income taxes 48,532
Minority Interest in loss of consolidated
subsidiaries -11,330
Equity in income of affiliated companies 2,582
Net income 18,503
CONSOLIDATED STATEMENT OF CASH FLOWS
April 1, 2002 to March 31, 2003
(Millions of yen)
Cash flows from operating activities 271,603
Cash flows from investing activities -147,988
Free cash flows 123,615
Cash flows from financing activities -159,756
Effect of exchange rate changes on cash and cash equivalents -7,193
Net decrease in cash and cash equivalents -43,334
Cash and cash equivalents at beginning of year 370,432
Cash and cash equivalents at end of year 327,098
This information is provided by RNS
The company news service from the London Stock Exchange
END
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